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Service sector outstripping retail spending: report

Budding entrepreneurs are being urged to cash in on the burgeoning services sector, with new figures suggesting time-poor consumers are swapping retail spending for service-oriented luxuries.

According to ANZ Banking Group, spending on services has grown by 3.8% over the past year, while spending on goods such as clothing, food and furniture has increased by only 2.6%.

And while people are still spending on services such as hair care, recreation and education, demand has soared for workers to undertake domestic duties including cleaning and gardening.

Jim Penman, founder of lawn mowing franchise Jim’s Mowing, describes the flood of work as “embarrassing”.

According to Penman, there are presently 38,000 inquiries in the system, up from 24,000 at the same time in 2010.

“What’s really horrifying about this is the busy time of year is still to come. We can’t find enough people to cope with the flood of work coming through,” he says.

According to market research firm IBISWorld, the household services sector will present the most promising business opportunities in the coming decades as time-poor, cashed-up consumers continue to outsource household duties.

“Everything we traditionally did for ourselves – including cleaning, childcare and even beauty – will be increasingly outsourced,” IBISWorld analyst Katie Hill says.

“The higher-skilled household tasks will be the most lucrative, so anything requiring trade skills. There will also be growth in non-essential items such as pet insurance and doggy daycare.”

Ian MacGowan of IBISWorld says there is a lack of major players in these areas, which means it is an “open field” for someone looking to start up in the services sector.

“Everyday things that we do for ourselves will increasingly be done by other people so there are fantastic opportunities all the way through,” he says.

Of the top 10 industries IBISWorld predicts will thrive the most in 2011, painting and decorating services come in at number eight.

According to IBISWorld, painters and decorators will benefit amid the housing construction market, despite the impact of rising mortgage interest rates.

This sector is expected to grow by $193.7 million this year, or 6.8%, suggesting there is an opportunity for start-ups to take advantage of the growth.

“[This is] partly a flow-on effect from the stimulus of the Commonwealth’s first home buyer subsidy in 2009-10,” IBISWorld says.

“[It’s] also supported by pent-up demand resulting from the escalation in Australia’s resident population over the past three years.”

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